In this post, I turn attention to some potential uses of these NCLCs in existing traditional non-profit institutions of higher education. As is well known, such innovations are often used to produce both sustaining innovation when utilized within the context of the traditional business model, and disruptive innovation when used within the context of a new business model optimized around the new innovation. Because of the wide variety of traditional institutions of higher education and of the challenges they face, we can anticipate that NCLCs will be used in both sustaining and disruptive modes in this sector.

As all studies of disruption have shown, it is very difficult for an existing institution to adopt an new innovation in a disruptive way. Disruption requires a change in business model, which requires often radical changes in procedures, resources, traditional definitions of excellence, and mindset. Thus, the way in which existing traditional institutions of higher education are likely to adapt to this NCLC resource likely will depend on the magnitude of the challenges they face in trying to preserve their existing business models.

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I have written often on this blog about the myriad challenges to the dominant existing business model of higher education. Among the challenges I have discussed, I believe that the two that are most important are those that have their roots in the unsustainable rapidly growing costs of traditional higher education (e.g.Update on Perspectives on the elephant of college pricing) and the often poor quality of its learning outcomes in areas critical to success in the competitive world of today and tomorrow (e.g. Another study showing students are not learning). As Clayton Christensen and coauthors show, (Christensen on disruptive innovation in higher education), high costs are difficult to control because they result from the many different tasks that a college or university performs (education, research, social growth); one can argue that this same complexity makes it impossible to optimize the education component, thus leading to poor learning outcomes as well.

It also is important to understand that one potentially disruptive element of the NCLCs is that they make the basics of a generic education readily available to all. Those traditional institutions currently offering a relatively generic education and mission increasingly will be forced to compete on cost, which is seldom a winning strategy.

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Very large endowments, large reserve demand for undergraduate slots, clear differentiation and high brand value are among the characteristics that will help shield institutions from the increasing challenges to the business model (call these "lowest risk"). At the other end of the spectrum, little endowment, minimal reserve demand, low differentiation and low brand value will obviously put institutions at greatest risk in the changing environment ("highest risk"). The lowest risk institutions will almost certainly choose to incorporate the NCLCs in a sustaining way, if at all; the highest risk institutions almost certainly will be forced to attempt a disruptive utilization. In between these two extremes ("higher risk") will be a very large number of institutions that will have to create some mixture of sustaining and disruptive innovation in order to remain viable.

The largest challenge for the lowest risk institutions in the near future will be to control annual tuition price increases to levels that are politically and socially acceptable - quite possibly very close to 0% in real terms. If endowments are particularly high, and fund raising particularly robust, these sources of revenue may be able to offset the loss of the 3% annual real increase in tuition that is built into the current business model. Otherwise, the typical way that price can be be controlled is by increasing sales in a way that has positive economies of scale. This suggests online learning offered to previously untargeted groups. It seems likely that low risk institutions going into online learning in a more significant way will often choose to create their own courses for brand reasons rather than take advantage of the NCLCs. Of course, should one of the MOOCs (a type of NCLC) create a profitable and robust business model, that might produce the revenue flow its partner institutions need to offset flat tuitions. This use of NCLCs and online learning generally can be incorporated into the existing business model with very minimal change.

Some lowest risk institutions, with MIT being perhaps the most articulate, propose to go a step further in the use of the NCLCs that they are creating - using them as test beds to improve learning for their traditional residential students:

MITx will be coupled with an MIT-wide research initiative into online learning that will study ways in which students, whether on campus or part of a virtual community, learn most effectively. To the degree that MITx demonstrates highly effective online learning tools from which campus-based students might benefit, such as self-paced online exercises, those tools will become part of the experience of MIT students. These tools will enable campus faculty to automate some of the more repetitive and less creative tasks, such as grading, thereby liberating more time to devote to innovative ways of teaching the material and to additional contact time with resident students.

For these forward-thinking lowest risk institutions, their NCLCs are parts of experiments designed to enable them to both improve the quality of learning (addressing the second challenge I mentioned above), and to better focus on those key educational interactions that can only occur on-campus, face-to-face. This latter focus will lead to a powerful sustaining innovation that serves to clearly differentiate their campus based programs from their online challengers in the future.

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It is probable that many of the higher and highest risk institutions will incorporate many of the sustaining innovations that these experiments make possible. However, it is likely that most will have to move beyond using the NCLCs in a purely sustaining way in order to meet the challenges they face.

To visualize how NCLCs may be used in these institutions, it may be useful to think of NCLCs as the 21st century version of textbooks - with some important enhancements. Each textbook seeks to define the important information and concepts in some area, and to "teach" that area. Textbooks can be and are used in a variety of ways. For many faculty, a textbook reduces their teaching efforts by relieving them of the necessity to define the scope of the material to be taught and create an organization and approach for the teaching of that material. This reduction in "background" time can be used in many ways, such as increasing emphasis on some aspect of learning in the course, or reducing the time faculty spend in the teaching function. Some faculty lecture by essentially reading the textbook, others use the textbook as a supplement to their own presentations, and some faculty do not use a textbook at all. And, of course, students have been known to learn the course material by reading the textbook without any input from faculty.

The widespread use of textbooks has produced some useful shared understanding of the general content and level of material that students should be exposed to at different points in their education. While this widespread use of textbooks makes it easier for institutions to offer a very generic product, the many ways in which textbooks can be used makes it possible for institutions to maintain quite distinctive profiles while still gaining the benefits offered by textbooks. The use of NCLCs likely will produce similar outcomes.

Any use of NCLCs obviously will change the Process box of the business model (How can we think about the wave of new innovations in higher education?) by altering faculty roles. One common instructional change where NCLCs likely will find great use is the flipped classroom. As commonly used, the flipped classroom involves a professor changing her role from lecturer to coach and tutor. As such, it is a purely sustaining innovation that does not impact the Profit Formula box of the business model either positively or negatively - that is, it does nothing to control the cost issue although it may well contribute significantly to improving learning outcomes.

For those institutions that must move aggressively to control cost, the NCLCs are likely to be used in a more disruptive way. Those institutions will probably move to a model in which the coach and tutor function of the flipped classroom will not be performed by a faculty member who is involved in all of the tasks of the institution (e.g.research, teaching, social growth), but by a new type of faculty who has special training in the coaching and teaching functions and works full time in this role. This person will also have appropriate subject matter knowledge, but perhaps not at the level required to be research active. As the NCLCs improve over time, it is probable that the number of students that this new teacher could serve effectively will increase. Replacing regular faculty with this specialized, pedagogically trained faculty with no research activity will lower educational costs per student, and quite possibly lead to better student learning outcomes as well.

Other uses of NCLCs will undoubtedly appear as they evolve and mature. By their nature, however, the primary disruptive use of NCLCs will be in replacing traditional faculty. This transition obviously begins to change familiar definitions of faculty and of their roles in very significant ways. Because the change reduces (or, in the truly disruptive limit, obviates) the need for traditional research active faculty, it will also lead to the institution having a lower research profile, which means some change in institutional mission. This reflects the reality that changing one part of the business model significantly changes all of the the parts. Obviously, such changes would need to be made thoughtfully and as part of a overarching strategic plan for the institution that seeks simultaneously to address all of the critical issues, e.g. cost, educational effectiveness, student appeal, differentiation and brand value.

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The higher and highest risk institutions can also try to control costs by increasing sales through online education. Attracting substantial numbers of students generally will be much more difficult than for the lower risk institutions with their higher brand value. It will be critical to create a program that is not generic and targets some audience that is not being well served by higher brand value institutions. Existing NCLCs can be used to create an online program, but creativity is required in order to avoid creating a very generic product. Generic products typically compete on price with other similarly generic products, leading to very low levels of profit/unit for everyone. This result would obviously defeat the purpose for starting an online program.

Some for-profits have shown that non-generic programs can be created using the simplest NCLCs. For example, StraighterLine utilizes good student support systems to differentiate its offerings from other simple NCLC products. At the higher end of the NCLCs, some companies such as Pearson and McGraw-Hill provide NCLCs that can be customized in many ways to meet the specific needs of their partners. This range of customization extends all the way to working with faculty to create courses, as in the partneship of Pearson and Arizona State - although this last step of creating courses moves this outside of our definition of "off the shelf" NCLCs.

Traditional institutions that enter the online field will find their offerings competing with those of other traditional institutions with online programs, existing established providers such as Walden and Phoenix, and the newer institutions discussed in How a course-rich world might impact higher education: II. Creating new institutions. With this competition, it is very likely that only a relatively small number of traditional institutions that start up online programs will succeed in attracting a significant number of students to their programs. Thus, although increasing sales via online education appears at first glance to provide an easy escape from the necessity to make significant change at the higher risk institutions, it is unlikely to be a reality for the majority.

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Prospective students will be constantly considering the trade-offs between different institutions, and different types of institutions. As described in Part II of this series, the new online institutions are very likely to continue to improve in quality and to maintain a cost structure well below that of most traditional institutions. Consequently, an increasing fraction of prospective students will be comparing seriously the respective benefits and drawbacks of new online institutions and higher risk traditional institutions. The traditional institutions with the best chance of winning those comparisons likely will be those that are not generic in some important dimensions and use some attributes of their physical location and presence to provide benefits not obtainable online. These are important issues that should be considered by the higher risk institutions as they think about ways that they might utilize the NCLCs to meet the challenges that they face.

Comments

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This is an interesting article, particularly because it reinforces how important it will be for high-risk institutions not to create generic products that typically compete on price with other similarly generic products. I also like the discussion of accreditation and the move from inputs (e.g., number of faculty) to a focus on outputs (e.g., competency-based outcomes) which could lead to changes in accreditation standards. The US seems to be at the forefront of these developments perhaps in response to the student loan debt crisis, and Barack Obama's reference to an alternative system of accreditation in his State of the Union address.

Lloyd comments: thanks, Ashley for the good comments. Europe has been very instrumental in focusing attention worldwide on competency based outcomes through the Bologna Process. As usual, the US is following a less centralized process, but we may all end up at the same point.

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